Analyzing CTS (NYSE:CTS) and Arrow Electronics (NYSE:ARW)

CTS (NYSE:CTS) and Arrow Electronics (NYSE:ARW) are both technology companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Profitability

This table compares CTS and Arrow Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CTS	12.94%	14.05%	10.10%
Arrow Electronics	2.62%	15.84%	2.97%

Analyst Ratings

This is a breakdown of current ratings for CTS and Arrow Electronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CTS	0	1	3	0	2.75
Arrow Electronics	1	2	3	0	2.33

CTS currently has a consensus price target of $73.50, suggesting a potential upside of 18.12%. Arrow Electronics has a consensus price target of $228.25, suggesting a potential upside of 15.07%. Given CTS’s stronger consensus rating and higher probable upside, equities research analysts clearly believe CTS is more favorable than Arrow Electronics.

Insider & Institutional Ownership

96.9% of CTS shares are held by institutional investors. Comparatively, 99.3% of Arrow Electronics shares are held by institutional investors. 2.4% of CTS shares are held by insiders. Comparatively, 0.8% of Arrow Electronics shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares CTS and Arrow Electronics”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CTS	$541.32 million	3.28	$65.32 million	$2.53	24.59
Arrow Electronics	$38.93 billion	0.26	$571.27 million	$19.73	10.05

Arrow Electronics has higher revenue and earnings than CTS. Arrow Electronics is trading at a lower price-to-earnings ratio than CTS, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

CTS has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, Arrow Electronics has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500.

Summary

CTS beats Arrow Electronics on 7 of the 13 factors compared between the two stocks.

About CTS

CTS Corporation designs and manufactures sensors, actuators and other electronic components for customers in a range of industries. Its products include frequency-control devices, connectivity components and electronic assemblies, as well as sensing and motion-control solutions. The company’s products are used in applications such as automotive systems, industrial equipment, medical devices, communications and aerospace and defense. CTS serves customers globally, with operations and business activities across multiple regions.

About Arrow Electronics

Arrow Electronics, Inc. is a global distributor of electronic components and enterprise computing products and services. The company connects manufacturers with components and technology solutions, supporting customers from product design and development through production and supply chain management. Through its global components business, Arrow supplies semiconductors and other electronic components, along with engineering and supply chain services. Its enterprise computing solutions business distributes technology such as data center, cloud, security and networking products, and provides related services to resellers and other customers.